Nathan VanderKlippe
Northern News Services

Yellowknife (May 24/02) - The latest estimate on cost overruns at the city's new twin-pad arena predicts the facility will cost $2 million more than initially anticipated.

Mayor Gord Van Tighem is warning that city borrowing or a tax hike are among a number of possible ways to cover the additional costs.

A memo from administration to council recommends the city enter into a number of contracts, which will push the project $2 million over budget. The memo says "there are no viable alternatives."

Council will sit at a special meeting to discuss the arena and its final round of tenders today. Originally budgeted at $11.267 million , current estimates indicate the complex could cost $13.167 million.

In the memo, administration says it has identified $700,000 in the current budget to cover part of that overrun. Other options include offsetting projects in the next couple of years, or borrowing $1.3 million.

Van Tighem said council will face a number of options.

"Where do you get money from? From a contributed surplus, from borrowing, from deferring things in the future, from increasing taxes, you get grants -- I'm certain that it will be one of those five or six options," he said.

Another option, although unlikely, is that construction on the arena be paused until additional money can be raised.

Coun. Dave McCann is already suggesting the project to be scaled back. "To me, there's something wrong, I would say," he said. "There will be some hard choices, I think, involved in cutting that back."

McCann said the city needs to live within its means, and called a tax hike a "non-starter" and said he is "very, very reluctant" to borrow.

Coun. Robert Hawkins said "it really sucks" but added, "at the end of the day we don't have much of a choice. We can't stop construction. Times are difficult and we're going to have to bite the bullet."

Coun. Alan Woytuik said, "it may mean some juggling of capital expenditures."

Major upcoming capital expenditures are: removal of the Gerry Murphy arena, replacing skylights at Ruth Inch Memorial Pool, implementing the city's waterfront management plan, replacing Engine 8 at the fire department and doing renovations on the Old Airport Road underpass.

The high tender costs come primarily as a result of the building boom in Yellowknife, and skyrocketing prices, particularly in electrical and mechanical trades work.

The memo notes that administration has already shaved some costs by using steel grade beams rather than concrete, by installing less expensive drywall and by deleting more expensive masonry items.

In the past few weeks, representatives from the city, PCL Constructors Northern Inc. and PSAV Architects have worked to come up with ways to reduce or pay for the cost gap.

Van Tighem said it is important that the construction quality of the arena not be sacrificed for costs. "One of the things in discussion has been to ensure that we don't jeopardize the integrity of the project by suddenly deciding we have to save a whole bunch of money," he said.